NOTE G – RESTRUCTURING-RELATED ACTIVITIES

We monitor the dynamics of the economy, the healthcare industry and the markets in which we compete and assess opportunities for improved operational effectiveness and efficiency and better alignment of expenses with revenues, while preserving our ability to make the investments in research and development projects, capital, our people that we believe are essential to our long-term success. As a result of these assessments, we have undertaken various restructuring initiatives in order to enhance our growth potential and position us for long-term success. These initiatives are described below.

2016 Restructuring Plan

On June 6, 2016, our Board of Directors approved and we committed to, a restructuring initiative (the 2016 Restructuring Plan). The 2016 Restructuring Plan is intended to develop global commercialization, technology and manufacturing capabilities in key growth markets, build on our Plant Network Optimization (PNO) strategy which is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities and expand operational efficiencies in support of our operating income margin goals. Key activities under the 2016 Restructuring Plan include strengthening global infrastructure through evolving global real estate assets and workplaces, developing global commercial and technical competencies, enhancing manufacturing and distribution expertise in certain regions and continuing implementation of our PNO strategy. These activities were initiated in the second quarter of 2016 and are expected to be substantially completed by the end of 2018. We revised the original estimate for the costs and savings associated with the program in the first quarter of 2018, as approved by the Board of Directors.

The following table provides a summary of our estimates of total pre-tax charges associated with the 2016 Restructuring Plan by major type of cost:



Type of cost	Total Estimated Amount Expected to be Incurred
Restructuring charges:
Termination benefits	$95 million to $105 million
Other (1)	$15 million to $25 million
Restructuring-related expenses:
Other (2)	$165 million to $195 million
	$275 million to $325 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2016 Restructuring Plan, including program management, accelerated depreciation and costs to transfer product lines among facilities.

Approximately $250 million to $300 million of these charges are estimated to result in cash outlays.

2014 Restructuring Plan

On October 22, 2013, our Board of Directors approved and we committed to, a restructuring initiative (the 2014 Restructuring Plan). The 2014 Restructuring Plan built on the progress we made to address financial pressures in a changing global marketplace, further strengthened our operational effectiveness and efficiency and supported new growth investments. Key activities under the plan included continued implementation of our PNO strategy, continued focus on driving operational effectiveness and efficiencies and business and commercial model changes. The PNO strategy simplified our manufacturing plant structure by transferring certain production lines among facilities. Other activities involved rationalizing organizational reporting structures to streamline various functions, eliminate bureaucracy, increase productivity and better align resources to business strategies and marketplace dynamics. These activities were initiated in the fourth quarter of 2013 and were substantially completed by the end of 2015, except for certain actions associated with our PNO strategy, which were completed by the end of 2016.

The following table provides a summary of our total pre-tax charges associated with the 2014 Restructuring Plan by major type of cost:



Type of cost	Total Amount Incurred
Restructuring charges:
Termination benefits	$91 million
Other (1)	$34 million
Restructuring-related expenses:
Other (2)	$136 million
	$261 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to the 2014 Restructuring Plan, including program management, accelerated depreciation and costs to transfer product lines among facilities.

The following presents the restructuring charges (credits) recorded pursuant to our restructuring plans by major type and line item within our accompanying consolidated statements of operations, as well as by program:



Year Ended December 31, 2017
(in millions)	Termination Benefits		Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	25	$	—	$	—	$	12	$	37
Restructuring-related expenses:
Cost of products sold	—		—		45		—		45
Selling, general and administrative expenses	—		7		—		6		13
	—		7		45		6		58
	$	25	$	7	$	45	$	18	$	95

All charges incurred in 2017 were related to the 2016 Restructuring Plan.



Year Ended December 31, 2016
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
Restructuring charges	$	19		$	—	$	—	$	2	$	7	$	28
Restructuring-related expenses:
Cost of products sold	—			—		34		—		—		34
Selling, general and administrative expenses	—			5		—		—		11		16
	—			5		34		—		11		50
	$	19		$	5	$	34	$	2	$	18	$	78

(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Fixed Asset Write-offs		Other		Total
2016 Restructuring Plan	$	24		$	1	$	15	$	—	$	7	$	47
2014 Restructuring Plan	(5		)	4		19		2		11		31
	$	19		$	5	$	34	$	2	$	18	$	78



Year Ended December 31, 2015
(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
Restructuring charges	$	23		$	—	$	—	$	3	$	26
Restructuring-related expenses:
Cost of products sold	—			—		31		—		31
Selling, general and administrative expenses	—			3		—		23		26
	—			3		31		23		57
	$	23		$	3	$	31	$	26	$	83

(in millions)	Termination Benefits			Accelerated Depreciation		Transfer Costs		Other		Total
2014 Restructuring plan	$	27		$	3	$	31	$	26	$	87
Substantially complete restructuring plan	(4		)	—		—		—		(4		)
	$	23		$	3	$	31	$	26	$	83

The following table presents cumulative restructuring and restructuring-related charges incurred as of December 31, 2017, related to our 2016 Restructuring Plan and our 2014 Restructuring Plan:



(in millions)	2016 Restructuring Plan		2014 Restructuring Plan		Total
Termination benefits	$	49	$	91	$	140
Fixed asset write-offs	—		2		2
Other (1)	16		32		48
Total restructuring charges	65		125		190
Accelerated depreciation	9		12		21
Transfer costs	60		75		135
Other (2)	8		49		57
Restructuring-related charges	77		136		213
	$	142	$	261	$	403

(1) Consists primarily of consulting fees and costs associated with contract cancellations.

(2) Comprised of other costs directly related to our Restructuring Plans, including program management, accelerated depreciation and costs to transfer product lines among facilities.

Cash payments associated with our 2016 Restructuring Plan and 2014 Restructuring Plan were made using cash generated from operations and are comprised of the following:



(in millions)	2016 Restructuring Plan		2014 Restructuring Plan		Total
Year Ended December 31, 2017
Termination benefits	$	19	$	—	$	19
Transfer costs	45		—		45
Other	6		—		6
	$	70	$	—	$	70

Program to Date
Termination benefits	$	27	$	93	$	120
Transfer costs	60		74		134
Other	10		77		87
	$	97	$	244	$	341

Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2016 Restructuring Plan and our 2014 Restructuring Plan, which is reported as a component of accrued expenses included in our accompanying consolidated balance sheets:



(in millions)	2016 Restructuring Plan			2014 Restructuring Plan			Total
Accrued as of December 31, 2015	$	—		$	29		$	29
Charges	24			(5		)	19
Cash payments	(8		)	(24		)	(32		)
Accrued as of December 31, 2016	$	16		$	—		$	16
Charges	25			—			25
Cash payments	(19		)	—			(19		)
Accrued as of December 31, 2017	$	22		$	—		$	22